Donors pool their resources to invest in Minneapolis

Written by Sarah Lemagie

When Dave Horan and his wife, Michelle, plan their charitable giving, they look for opportunities to support causes that matter to them—but that’s not all. “We don’t just want to give money to organizations that we believe in,” Dave said. “We also want to provide incentives for them to operate efficiently and effectively.”

InvestMPLS helps great schools expand

When the Horans heard about InvestMPLS, The Minneapolis Foundation’s new impact investing program, they saw it as a great way to apply solid business principles to their philanthropy. Since InvestMPLS supports organizations through loans rather than outright donations, “They have more skin in the game,” Dave said.

The Horans are among the 18 Foundation donors who have pooled assets from their Donor Advised Funds in InvestMPLS since it launched in July of 2016. Many wanted to invest in education and economic vitality right here in Minneapolis. Some also appreciate the chance to put their charitable dollars to work while keeping them available for future grantmaking.

InvestMPLS is a revolving loan pool that’s designed to produce both a modest financial return and a social benefit. Participants invest in the pool at a fixed rate of return for five years. At maturity, principal is returned for future investment or grantmaking. Since its launch, InvestMPLS has deployed $5.1 million in loans.

Assets in the pool are invested with intermediary Community Development Financial Institutions (CDFIs) and deployed as opportunities arise to effect positive change in line with the Foundation’s mission. Initial investments with CDFIs support two of our key strategies: to create living-wage jobs and high-quality seats at schools educating low-income students of color.

“These loans are helping minority-owned businesses grow and great schools expand. By teaming up to with our donors to invest in Minneapolis together, we can make a much bigger difference than any of us could alone.”

– Jo-Anne Stately

The most recent investments, made this summer, speak directly to those goals: a $1 million deployment to the Nonprofits Assistance Fund, a local CDFI, will be directed to loans for charter schools serving low-income students in Minneapolis. The first school to benefit will be Hiawatha Academies, which will use the capital for its new high school building. Two additional loans will help create jobs: A $300,000 investment with the African Development Center will support small business loans to African immigrant-owned businesses in Minneapolis and surrounding suburbs, and $500,000 invested with the Metropolitan Economic Development Association will be used to provide much-needed capital to Minneapolis-based minority businesses, helping them become sustainable, long-term employers.

“These loans are helping minority-owned businesses grow and great schools expand,” said Jo-Anne Stately, the Foundation’s Director of Impact Strategy for Economic Vitality, who estimated that the fund’s initial loans will help create up to 1,200 jobs and 800 school seats over the next three to five years. “By teaming up to with our donors to invest in Minneapolis together, we can make a much bigger difference than any of us could alone.”

An expansion of Hiawatha Academies, a high-performing South Minneapolis charter school, is just one of the projects that Minneapolis Foundations donors are supporting through InvestMPLS.